| Effects of Stock Market Fluctuations on the Adequacy of Retirement Wealth Accumulation |
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WP#2004-16 AbstractThis paper examines the relation between fluctuations in the aggregate value of equities and the adequacy of households’ saving for retirement. We find that many and perhaps most households appear to be saving adequate amounts for retirement, but almost no link between stock values and the adequacy of retirement saving. Historical variation in equity values and ownership correlates poorly with historical variation in the adequacy of saving. Even a simulated 40 percent decline in stocks has little effect on the adequacy of saving. The results occur because equities are concentrated among households with significant amounts of other wealth. For executive summary in PDF For full paper in PDF Eric M. Engen is a residential scholar at the American Enterprise Institute. William G. Gale is The Arjay and Frances Fearing Miller Chair and a Senior Fellow in Economic Studies at The Brookings Institution. Cori E. Uccello is a consultant for the Urban Institute. The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) to the Center for Retirement Research at Boston College (CRR). The opinions and conclusions are solely those of the authors and should not be construed as representing the opinions or policy of the SSA or any agency of the Federal Government or of the CRR. The authors would like to thank Emil Apostolov, Ben Harris, Brennan Kelly, Samara Potter, and Emily Tang for outstanding research assistance. |